Energy agency tries merit pay

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Officials at the National Nuclear Security Administration say they hope a new performance-based pay system will help the agency attract the crème de la crème among technical researchers, scientists and engineers.

Two thousand of the agency’s 2,500 employees are taking part in a demonstration program that began in March and will last five years. The agency worked with the Office of Personnel Management to develop the system.

This isn’t NNSA’s first pay-for-performance system. The 500 employees who won’t participate in the new program are already under a merit pay system known as excepted service. Those employees — who include engineers, program managers and cybersecurity professionals — can eventually transfer into the Senior Executive Service, which has its own pay-for-performance system.

Before developing the new pay system, NNSA and OPM studied other pay-for-performance programs, including the National Security Personnel System and the long-running alternative pay program at the Naval Air Weapons Station China Lake, Calif.

Mike Kane, NNSA’s associate administrator for management and administration, said officials found that moving from the General Schedule pay system requires additional education and training because supervisors are given greater flexibility in recruiting employees and setting pay based on performance and skills. And employees will need training as they gain new responsibilities.

“We have to make sure to have robust training budgets after they perform to that level and we give them those pay increases,” Kane said.

Officials agreed that performance metrics are another important aspect of successful pay-for-performance programs. Kevin Mahoney, associate director of human capital leadership and merit system accountability at OPM, said NNSA will use a new evaluation method, the Alternative Personnel Systems Objectives-Based Assessment Framework. OPM used that framework to evaluate new performance-based pay systems developed by the Defense and Homeland Security departments.

“NNSA will tailor the assessment framework to include indicators, assessment criteria and data sources that will be used to assess various features of the project, including pay for performance,” Mahoney said.OPM will evaluate NNSA’s program three times during the five years.

NNSA’s test program does not affect unionized employees. But federal unions, which have opposed pay-for-performance systems, are paying attention.

For example, Colleen Kelley, president of the National Treasury Employees Union, has labeled many of the government’s performance-based pay experiments as dismal failures, often because employees have had little input into the design and implementation of those.

Kelley and other union leaders said they would keep an eye on NNSA’s program to see whether it is successful and could be used as a model for similar initiatives at other agencies.

“Our intention is to keep abreast of developments concerning this pilot program and its impact on affected employees,” Kelley said. NTEU participated in meetings about NNSA’s new system. Kelley also testified in February on performance-based pay systems before a House Oversight and Government Reform Committee panel. Kelley said she was dealing with a slew of grievances and arbitration requests from federal employees who complained of high attrition rates and bottomed-out morale under such pay systems.

At the hearing, lawmakers complained that the Bush administration hadn’t supplied enough money for agencies to keep up with the pay rewards for exceptional service. “Performance-based increases are often funded by denying or reducing other employees’ [cost-of-living adjustments] and bonuses,” said Rep. Danny Davis (D-Ill.).

However, Kane said NNSA employees won’t see major changes in heir pay when they move to the new system. However, he added that the agency will face hurdles as it implements the program during the next five years.

“Everyone needs to understand that this is a bit like going back to school,” he said.